If you ask a Wall Street analyst about the Federal Reserve’s power to move markets these days you’d better have a soapbox ready. Don’t fight the Fed, they’ll say; the central bank’s ability to stoke or slow the economy through interest rate changes and new policies like quantitative easing and tightening is epic and unprecedented. Even a single line at a press conference from Chair Jerome Powell can impact share prices. That means investors have to be fluent in “Fed speak,” the “turgid dialect” that central bank officials use to describe their views—or risk being caught off guard. Simply put, a Fed speaker can get ahead of the big thing set to move markets.
But it wasn’t always this way. Since its inception, the Fed has been a driving force in the economy that Wall Street has watched closely, but officials’ tone and word choice in public comments wasn’t always so important. JPMorgan Chase economist Joseph Lupton explained in a Wednesday research note that as recently as the 1990s, “silence and obfuscation” by design was the norm.
